Fannie And Freddie Are About To Make It Easier For Americans To Get Mortgages

WASHINGTON (Reuters) - The regulator of Fannie Mae and Freddie
Mac on Tuesday laid out new policies that could make it easier
for many Americans to obtain mortgages, in part by holding off on
any reduction in the size of mortgages the two firms can buy.

Federal Housing Finance Agency Director MelWatt, in his first public speech
since taking office in early January, also said the two
government-controlled firms would ease standards that govern when
banks must buy back faulty loans from the two mortgage finance
giants, which could also help loosen the credit taps.

"FHFA will not use its authority as conservator to reduce current
loan limits," Watt told the
Brookings Institution. "This decision is motivated by concerns
about how such a reduction could adversely impact the health of
the current housing finance market."

In easing standards for so-called mortgage put-backs - when banks
are required to repurchase faulty mortgage they sold to the two
companies - Watt took aim at a
risk lenders cite for the still-tight credit that has hindered
the housing recovery.

Tight lending standards have made it especially hard for
first-time buyers and those with weaker credit to get mortgages.

Watt said Fannie Mae and Freddie
Mac, which buy about 60 percent of new home loans and package
them into securities they issue with a guarantee, would relax the
mortgage payment history requirements lenders need to meet.

FHFA has sued 18 financial institutions, alleging they saddled
Fannie Mae and Freddie Mac with bad mortgages. Those lawsuits
have resulted in settlements of about $16 billion so far.

"Repurchase risk remains a top concern for the mortgage
industry," Watt said. "Ultimately,
this undermines the goal of improving access to mortgage credit
for creditworthy borrowers."

(Reporting By Margaret Chadbourn; Editing by Andrea Ricci)

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